Litigants often view the choice between seeking an adjudicated outcome of a dispute and settling out of court as one between invoking the public rule of law as a dispute resolution mechanism on one hand and substituting private contract for law on the other. This dichotomy overstates the difference in the role law plays in adjudication and in alternative dispute resolution (ADR). Law significantly affects non-adjudicative settlements in two related but distinct ways. First, the parties' substantive legal entitlements affect out-of-court settlement outcomes, because a litigant with a strong case can demand more as a condition of agreeing to a private settlement than can a party with a weaker case. . . . Second, the legal rules governing settlement behavior and many of the rules governing the adjudication process also influence nominally private dispute resolution activities. This [second and] less-recognized effect of law on ADR is the subject of this article . . . .